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The Production-Linked Incentive (PLI) scheme has spawned fresh and welcome interest in investing in domestic manufacturing. It will cost Rs 2 trillion (around 1 per cent of gross domestic product, or GDP) over five years. The winds of current industrial policy continue to blow inward. Since 2017, we have raised tariffs on thousands of tariff lines, covering 60 per cent of items we import. Our simple average Customs duty of 17 per cent is now the highest of all emerging economies. PLI is meant to deepen domestic supply-chains and so, over time, promote greater competitiveness in Indian industry. Will it work?
The PLI scheme provides a subsidy, typically 4-6 per cent of sales, for firms in 13 sectors to make